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$1.4M allocated toward failed tech center

Business incubator isn’t meeting revenue goal.

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By Thomas Gnau, Staff Writer 11:02 PM Friday, January 27, 2012

DAYTON — A publicly funded center meant to help new businesses working with wireless technology has not generated expected revenues, resulting in its chief executive working for free for 20 months and public officials searching for a new business model.

In 2007, Dayton City Commission approved a $1.4 million investment in the Dayton RFID (Radio Frequency Identification) Convergence Center as an incubator for companies creating new uses for RFID. The technology lets objects or people be ID’d and tracked wirelessly via radio waves.

The center was supposed to become self-sustaining through royalties paid by companies that were based there. On Friday, public officials said that hasn’t happened.

When the Dayton Commission approved its $1.4 million investment, the city expected the center to create 100 jobs during three years with an average annual salary of $80,000. Job growth during 10 years was expected to generate $1.8 million in city income tax revenue.

Instead, the center has foundered and none of its tenants have made enough money to pay substantial royalties back to the center.

“The revenue at the center is not supporting or sustaining the current management team,” said Shelley Dickstein, Dayton assistant city manager.

The center will remain open, officials said. But the center’s executive director and chief executive, Brad Proctor, will no longer have those titles or a day-to-day management role. Proctor said Friday he would continue to help with a “transition” to a new way of operating.

Proctor said he has not drawn a paycheck for 20 months, waiting while the city and its economic development arm, CityWide Development Corp., searched for ways to bring in revenue for the RFID Center that would at least cover the costs of a management team. Two associates of Proctor’s at the center have been laid off.

In 2004, Proctor formed EPC Technologies to start a local RFID incubator. After the city’s $1.4 million investment, the incubator opened its doors at 711 E. Monument Ave. in 2009.

In 2011, Dayton RFID Corp. issued $118,000 to EPC to cover employee salaries at the center, said Steve Nutt, strategic development director with CityWide. It was up to Proctor to determine how that money was dispersed, Nutt said.

Proctor said he dispersed none of that money to himself, giving it instead to two other staffers.

The convergence center’s was developed in 2005, during a very different economy, Proctor said.

Since then, the economy has suffered the worst recession since the Great Depression, and grant money for the center’s member businesses — usually start-ups seeking new commercial uses for RFID technology — has dried up, Proctor said.

Robert Zielinski, director of commercial marketing for CDO Technologies and a board member for the center, said the center’s first phase is complete, and said Proctor and his team have done their jobs well. The center and its tenants will continue to operate, he said. If they need assistance, they may turn to CityWide, Zielinski said. “I wish we could have stayed on the honeymoon longer,” Zielinski said.

Dayton City Commissioner Nan Whaley believes the center and its member businesses can still be made viable. “We just have to be thoughtful about it, and realize we’re doing this with taxpayer dollars” Whaley said.

Contact this reporter at (937) 225-2390 or tgnau@DaytonDailyNews.com.

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